The last few weeks have been all negative for the markets. Through Friday’s close, the S&P 500 is down almost -14.5% from the August relative high and very close to its low for the year. In just the last week, all but one day (Monday), were down at least -0.80%, with two of those days being “outlier” days (a trading day beyond +/-1.50%). According to the media, this all comes as a reaction the Fed’s “hawkish” action, on top of high inflation.
Markets have a tendency to take extreme measures in discounting the news cycle. Financial markets tend to bottom when the news is at its worst, well before things appear to get to better. That’s not to say that we have now seen a market bottom, but it is to say that markets tend to do the opposite of what is expected. In other words, it would be a bad decision to throw in the towel after a rapid decline. A crazy downward move can be followed by an equally crazy upward one. Do not fight crazy, because crazy does not quit.
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